Australian investment in education: VET

Australia’s total reported investment in the VET sector is at its lowest level in real terms since at least 2008. This report from the Mitchell Institute tells us more.

Key points

• Australia’s total reported investment in the VET sector is at its lowest level in real terms since at least 2008.
• Most states and territories are spending less in real terms on VET recurrent funding than they did ten years ago. There are some signs of an increase in investment in the VET sector in certain jurisdictions; however, overall investment in VET is still trending downwards.
• The Australian Government is investing more in real terms in the VET sector than it did in 2008. As a proportion of government investment in education provision in the VET sector, the Australian Government has increased its share of investment from 26.5% in 2006 to 38.2% in 2018.
• Australian Government investment increased significantly between 2012 and 2016 due to the introduction of VET FEE-HELP. This program generated concerns about financial sustainability and quality of provision, resulting in the scheme being closed down and replaced by VET Student Loans (VSL).
• It is necessary to arrive at a sustainable model of VET funding to reverse declining trends in participation, and achieve the right balance between quality and efficiency.
• Promising areas of policy reform include:
  1. Implementing agreements that more directly specify funding commitments made by all levels of government.
  2. Aligning VET funding policy with higher education funding policy to create a more cohesive tertiary education environment. This should include reforms that enable VET students to access the same level of support as higher education students, such as the ability to defer payment for all out-of-pocket costs.
  3. Establishing an efficient price per course, similar to the approach that has been taken to guide investment in the school education and higher education sectors.
  4. Giving greater attention to the limitations of market based reforms, such as contestability, as a principle for investment and policy in the VET sector, especially in balancing the agility of the sector with appropriate quality assurance for new and existing providers.